Last week, EA and BioWare Austin said Star Wars: The Old Republic would join the free-to-play ranks. Game monetization expert Ramin Shokrizade examines what happened to the subscription model's great hope.

A long time ago in a galaxy far, far away, Star Wars: The Old Republic was vaunted as the kind of large-scale, massively mulitplayer online game that would justify a monthly subscription. It didn't have to follow the free-to-play trend, because, well, it was supposed to be a special case.

But things change fast. BioWare and Electronic Arts announced last week, amid reports of dropping subscription numbers, that SWTOR would be changing its business model from subscription to free-to-play. Calling an audible and drastically changing the fundamental way a game makes money -- after less than a year on the market -- is not a particularly good sign.

So what went wrong with SWTOR? While I could ask 10 people this question and get 10 different answers, here I will address the two most common design mistakes that lead to new MMO launches being commercially unsuccessful.

Lack of social interaction

What separates massively multiplayer online games from other simpler products is the promise of social interaction. A much more consistent play experience can be had with a single player or small team competition game for those that are not seeking this social interaction from their play time. It is thus imperative that an MMO be built to provide maximum positive social interaction. Most social interaction takes one of three forms, in addition to chat functionality:

A. Cooperative Play: Taking on an opponent with five, 20, or even 100 of your friends and teammates adds a great deal to the excitement level of a game. Not only does the result of an encounter require a lot more communication and team work, it also adds additional randomness that can make every encounter unique. Doing well in such situations also can bring great prestige as others will come to admire you if you perform well under pressure when they are depending on you.

The best parts of SWTOR are the story line missions. Their cinematic quality makes you feel like you are in a movie that you control. The weakness of this design is that the focus is on a single player, and that a full group could be just two players and AI companions. This gives SW:TOR the feeling of a "Massively Single Player Game". While there are missions that can accommodate more players, the game never manages to escape this feel.

B. Trade and Economic Interactions: Being part of a player driven economy can give opportunities for player interactions that involve not just dozens of players, but even thousands. If your economy is designed well, assets in the economy will maintain their value, or equity, over time and allow a player to build wealth and prestige. This can make for a game with a very long life span, as EVE Online has demonstrated.

Starting on the first day of the retail launch of SWTOR, I held an "economic deathwatch" on the LinkedIn Game Developer group forum. I tracked the real world exchange rate from SWTOR credits to real dollars. By giving almost daily exchange rates I was able to demonstrate that the value of game credits fell by 97 percent in the first 30 days. This destroyed all equity in the economy and amputated all of the associated content. Given the complexity of the craft system in SWTOR, I would say this eliminated most of the social interactions in the game before they even had a chance to get started.

The mechanism of attack against the economy was an instance reset exploit. I described this class of virtual economic attack and its countermeasures in my 2009 proprietary paper, Sustainable Virtual Economies and Business Models. A vulnerability was discovered during the SW beta test and a macro was developed to take advantage of it. It is in the interest of the creators of such macros to keep them secret, because competition can quickly drive down the value of credits created this way. In this case the macro did end up in the public space, implying that the motivation for whoever did so was to rapidly destroy the commercial viability of a major Western game product. This was disastrous for both EA and the gold farmers preying on SWTOR. I did notify EA immediately about this macro, but by then the damage was done.

C. Competitive Play (PvP): Competing against other players can be an excellent form of social interaction that makes gameplay both prestigious and unpredictable. The downside to competitive play occurs when PvP is non-consensual. This is because not only is the result usually 100 percent predictable (lowering the enjoyment of the griefer), but can be discouraging to the victim. To deal with this problem most MMO designs restrict competitive play to PvP arenas, which are usually tacked onto the original game late in the development cycle. Since such games are built for PvE first and foremost, PvP combat balance is rarely achieved, making PvP combat in arenas disappointing.

As combat in SWTOR was balanced for PvE, PvP combat balance was never attainable. Further, since the PvP arenas were added very late in the development cycle, they are not as impressive as the rest of the game and can quickly become repetitive. Possibly sensing this, the Bioware developers made the rewards for arena PvP much greater than in the PvE game, almost forcing players to spend time every day in PvP, whether this was their preference or not. While the intention might have been to conserve the main story line and make it last longer, I think for many this reduced the overall immersion of the game.

Ineffective monetization design

SWTOR launched with an unlimited play subscription model, which is about as close to no monetization model as you can get. It is difficult to recall any MMO launched after 2004 that was a commercial success when monetized this way. Even those games launched before 2004 with subscription monetization models have attempted (with varying degrees of success) to integrate microtransactions and free to play design elements.

The problem with the unlimited subscription model is that it rewards players for blasting through your content as fast as possible. Players have adapted to this over the years by planning days off work to do all-nighters on launch day. This model rewards players for playing completely through your game in the first month and is a recipe for canceled subscriptions and poor retention.

The use of a free-to-play monetization model requires careful placement of your best content, what I call "carrots," on the other side of payment opportunities that I call "gates." Effective placement of carrots and gates requires early integration with core design elements, and thus is best achieved if it is planned for at the very earliest stages of game design. Converting a game from a subscription model to a free-to-play model is difficult to do effectively -- especially if the base game is complex -- and is no guarantee of increased revenues.

If a free-to-play model is designed into the core game design from the start, and is done without selling game objectives or advantages, it is my opinion that this can multiply first year revenues by between two and four times. This perhaps makes the choice of monetization model the biggest single factor in the ultimate success or failure of an MMO product. In the case of SWTOR, this is likely its most fatal flaw and should act as a clear warning to future MMO producers to consider this aspect of game design earlier and more carefully.

In a few years, history may look back at SWTOR as an artistic milestone that was not a commercial success. It may signal the official end of the subscription monetization model for MMOs, though I think this was clear years earlier. Games that are a commercial success, like World of Warcraft or EVE Online, can endure long enough to produce numerous content expansions. This makes them very difficult to unseat by new product offerings. Any new MMO entering the market in the current environment must be carefully designed from the start to endure long enough to build market share.

Ramin Shokrizade is a former U.S. Olympic track coach and trainer, who became a top cyberathlete in 1999 and started writing mainstream articles on virtual economies and currencies in 2000. In 2005 he began inventing passive real money transfer defenses, and advanced virtual economic and monetization models for next generation online games. He is currently a partner at RIVET Studios Ltd. and is their Game and Monetization Design Director.